The growing popularity of smartphones is proving a double-edged sword for newspaper publishers, with the number of consumers reading more content online almost exactly counterbalanced by a decline in those buying print products, according to a report from Orange. The telecoms company’s study found that 14 percent of people who access the internet on their mobile phones said they read fewer newspapers as a result. On the flipside, 13 percent of respondents said that owning smartphones such as the iPhone had led them to read more newspaper content online. However, the same is not true of all publishing sectors with 16 percent of mobile media users – those accessing the internet via a smartphone – saying they read fewer magazines, but none saying they read more magazine content online. The problem for newspaper publishers is the gap between declining print circulation and revenue and the relatively small revenues from products such as smartphone apps and mobile internet advertising. The Interactive Advertising Bureau puts the UK mobile internet ad market at just under GBP 40m in 2009. Orange’s report points to the potential of mobile commerce, in which it includes the purchasing of apps, but does not provide any insight into revenue generation
Six French newspapers have come together to create an online newsstand where readers will be able to buy and read their content. The initiative, which will be launched in September, was announced Thursday by France’s National Daily Press Union as an alternative to Google News, El País reported. The maneuver comes months after Google announced its intention to include advertising on its news aggregation system. French newspapers had tried to negotiate with Google to receive a percentage of the ads revenues. But, as their request was denied, they have decided to launch a paid service of their own. The content’s price will be fixed by each daily and several subscription packages to either individual articles or an entire publication will be offered. “The monetization of the web contents, which has been agreed on by the editorial groups, is the main priority,” Les Echos explained. So far, Le Monde, Libération, Le Figaro, Les Echos, Le Parisien and L’Equipe have agreed to develop and finance the virtual newsstand. Nonetheless, editors expect other newspapers and magazines to join the project. The group is also trying to obtain state subventions offered to the press by the Sarkozy administration, ABC.es informed. According to Xornal de Galicia, the six dailies are currently negotiating with Orange and Microsoft Bing to build the platform, which will be accessible by personal computer, mobile phone and e-reader gadgets like the iPad.
Subscribers to TalkTalk’s broadband packages could soon be able to also take up mobile phone services as part of the deal, it has emerged.
The broadband provider is reportedly keen to become a mobile virtual network operator once its demerger from parent company Carphone Warehouse is completed at the end of March. Mobile Today reports that if the firm is successful, it could offer mobile services alongside its existing broadband and home phone bundles, as well as the digital TV platform it gained control of through its acquisition of Tiscali.
Discussing the move with the website, Strategy Analytics analyst Phil Kendall said the move was essentially “a natural extension” for TalkTalk. “Look at the others. O2 now has a fixed-line consumer offering, as does Orange. Vodafone is also likely to launch a product. T-Mobile and 3 are the only single play providers left in the UK,” he added. TalkTalk recently launched its new We’ll Call You service, which allows lonely over-65s to enjoy regular chats with a member of staff.
The European giants that pioneered the mobile telecoms industry are now stumbling in the wake of American and Asian rivals
When Eric Schmidt, chief executive of Google, takes to the stage in Barcelona on Tuesday evening to deliver the keynote address to hundreds of mobile phone industry executives gathered for the Mobile World Congress the industry’s biggest trade show, the message will be clear: well done, Europe, for getting mobile communications this far. We’ll take it from here.
For two decades, Europe’s mobile telecoms sector has considered itself to be a world leader. It had the biggest names, the technological knowhow, the most customers. Over the past year, however, that hegemony has been smashed. At a time when Europe is mired in economic turmoil and facing a demographic timebomb, one of its great hopes for fuelling future growth is slipping away.
“Europe has become the ‘flyover states’ of the mobile industry,” says a senior European executive, referring to the disparaging term used to describe middle America by high-powered business travellers shuttling between California and New York.
“All the service innovation is being done on the west coast of the US, and all the manufacturing and technical innovation is being done in the Far East. All we’re doing is selling other people’s products.”
His customers now care only about access to services such as Google, Facebook and Twitter on their phones, and the devices they covet are the iPhone or the latest BlackBerry, which has proved a great hit with teenagers. This year’s hot handsets, the executive says, are being made by HTC, the Taiwanese manufacturer, which will use this week’s show to unveil its latest devices, featuring Google’s Android software. While Apple lords it over the high end of the market, China’s Huawei and ZTE are creating cut-price smartphones that will democratise the mobile internet in the coming years.
Sensing the change blowing in the wind, even Microsoft’s chief executive, Steve Ballmer, is turning up in Barcelona to front the software group’s latest attempt to break into a market that it was once shut out of by Europe’s gatekeepers, Nokia and Ericsson. As for Apple itself, the iPhone maker would never do anything so vulgar as actually appear publicly at the event, or have a stand in one of the eight exhibition halls; but its executives will be in town, holding meetings behind closed doors with suppliers and networks as it looks for more wireless partners to back its latest invention, the iPad, outside the US.
After a week in which the turmoil in Greece has shown the fragility of the eurozone and a new acronym, “Pigs”, has entered the economic lexicon as a harbinger of doom, the evidence the Mobile World Congress will provide of Europe’s loss of control over the mobile phone industry is a harsh blow.
It leaves European policymakers, many of whom have bought in to the idea that the future lies in the creation of innovative technologies, to pin their hopes on new areas such as green energy or fall back on old stalwarts such as biotechnology. But the green sector has yet to prove the breakout success that will give Europe its own version of Silicon Valley, while biotech has always been the saviour that never quite seems to arrive. After the dotcom crash at the start of this century, biotechnology was looked to expectantly, especially in the UK, as the next big thing. In America, meanwhile, graduates from Stanford and drop-outs from Harvard were quietly getting on with building Google, Facebook and Twitter.
The impressive lead in mobile communications that Europe once held over the rest of the world was created by the European Union. In the 1980s, when wireless communications went mass-market, America’s Motorola vied with Finland’s Nokia and Sweden’s Ericsson for dominance of the nascent global market. Europe’s players were handed the advantage when the EU officially adopted and set aside specific wireless spectrum for a digital mobile technology called GSM.
The first networks appeared in 1991 and overnight the European technology players that had helped create the standard had a huge market. Seeing its success, other countries soon adopted GSM, expanding the market for Ericsson, Nokia and others throughout the 1990s. Even America’s largest network, Verizon Wireless, is switching to the super-fast version of GSM later this year. So where did it all go wrong?
“As soon as the mobile business opened itself up in such a way that internet technology could become available on mobile networks, that was the end,” according to Mark Newman, chief research officer at Informa Telecoms & Media. “Maybe Europe had a chance but it blew it, in my view, because there are too many sets of interests, each so obsessed with their own sphere of influence that they could not co-operate.
“You had operators and device manufacturers never pulling in the same direction, and I cannot see any way in which Europe can regain the ascendancy. Essentially the future of communication services is that people want access to the cloud of services called the internet.”
The industry did see it coming. It tried several times to create a mobile internet that was not going to be beholden to the American giants. In the late 1990s, a pared-down wireless internet service called WAP was being pushed by several GSM operators. Customers, many of whom were used to dial-up internet access, were unconvinced and soon started summing up the service by replacing the “w” with “cr”.
A few years later, O2 tried to create its own mobile web by importing the i-mode standard from Japan. Again, it was a dire failure. When the “true” web started turning up on the next generation of 3G phones, the operators tried to keep their customers within “walled gardens” – as they were called – creating content portals that offered customers what the operator thought was the best of the web. Usage was paltry. Having spent billions buying licences to run 3G services, the operators had to prove to investors that there was consumer appetite for mobile internet services, so they demolished their garden walls.
Ironically, the operators’ initial intransigence over the mobile web brought both Apple and Google into the industry. The former saw a way of bringing the vertically integrated approach that had worked so well in music – where it controls both the device, the iPod, and the store, iTunes – into the mobile market. The latter made its move because it feared that the combined effect of Apple and market leader Nokia could shut it out of the mobile internet altogether.
In fact, Google needn’t have worried about Nokia because the runaway success of the iPhone changed the game. The arrival of the 3G version of Apple’s device a year and a half ago dramatically altered the mobile industry and proved that consumers, given the right device, will do much, much more than use their phone to make calls and send texts.
Nokia is still the largest mobile phone manufacturer in the world. But the Finnish giant, a former rubber boot manufacturer whose success created hundreds of millionaires and helped pull the country out of recession when the Soviet Union collapsed, has been sideswiped by the success of Apple and the encroachment of Google’s Android platform. It has been forced to make Symbian, its own software platform, free to developers and handset manufacturers, as Android is, and last month took the desperate decision to give users of its smartphones free access to its satnav services to make its devices as attractive as the iPhone. Only three years ago it spent €6.5bn on the map firm Navteq but it is now effectively giving that intellectual property away as it tries to protect its market share.
The crisis into which Nokia has been plunged by Apple has pushed it into bed with another American giant, Intel. The two companies will use Mobile World Congress to announce new microchips that Nokia hopes will help it to compete with HTC’s latest devices. Apple already has its own in-house chip design team, having bought fellow Californian company PA Semi two years ago.
Ericsson, meanwhile, spun its handset business into a joint venture with Sony. However, after initial success with ”featurephones” based on Sony’s Cybershot (camera) and Walkman (music)technologies, Sony Ericsson’s share of the billion-device-a-year market has collapsed under the onslaught of Apple and BlackBerry, halving from about 10% three years ago.
But it’s not all doom and gloom, says Olaf Swantee, who runs Orange’s mobile operations across Europe. He reckons that Europe’s big mobile phone operators, such as Orange, Vodafone and O2, have the opportunity to leverage their huge customer service bases to get themselves back into the game.
“Yes, the [US] west coast and Asia have really taken very strong positions,” he admits. “If you take equipment manufacturing, companies like Huawei have grown really strongly and we have seen traditional software manufacturers like Google and Apple enter the mobile market as it becomes a more software-driven environment. But, as the market moves to a more mature phase, what is becoming more and more important is the customer interface.”
The importance of direct customer contact, whether that be through shops or call centres, was proved this year when Google launched its Nexus One mobile phone. It sold it only through its website, and those customers who had problems with the phone had to email Google, rather than talk to its network partner, AT&T. Many found themselves waiting days for issues to be dealt with.
In the race to increase revenues – not least to pay for the network investment required to deal with the traffic generated by devices such as the iPhone – the mobile phone operators have the chance to claw back money from the likes of Apple and Google, which aggregate other people’s content through their iTunes and Android marketplace stores.
“Once the markets top out,” says Patrick Bossert, director of strategy at global billing services expert Convergys, “and growth slows and margins get tighter, then those aggregators will be looking to solutions for local-language customer care and marketing.
“They cannot afford to establish a base in every market in which they operate, but the service providers are already there. They may not have a lot of leverage now but, boy, do they have a lot of assets that are actually quite desirable.”
It’s a theme that the GSM Association, which represents all these networks, will be picking up this week as it tries to wrest some of the initiative back from Google and Apple.
“I don’t feel that we are being left behind, but there are areas that the mobile operators need to address,” says Michael O’Hara, the GSMA’s chief marketing officer. “And getting their assets into the developer world, finding a way to get into the value chain, is really key.”
Being great at customer service is hardly the white heat of technology, but for Europe it might just be the start of some sort of fightback. For now, though, the story is going to be – for home-grown talent, at least – depressingly familiar. As Informa’s Newman warns: “In 2010, Apple is going to make hay. I can’t see anyone catching them up this year.”
The extra data traffic which plagued O2 when it launched the iPhone will not be a problem claim Orange and Vodafone. Orange have already launched the iPhone and Vodafone are set to do so on 14 January. Jeni Mundy, Vodafone UK’s CTO, said the company has spent “millions” strengthening its core network to deal with the increased demand on its networks as it phases out analogue voice for digital.
Data accounts for half the traffic across Vodafone’s network, a figure which looks set to grow as customers start to rely more on their smartphone. Over at Orange – who have just encompassed T-Mobile’s UK network – the company has introduced what it terms high density (HD) voice which expands the frequency range of mobile signal and improves signal quality.
The reason for these quick claims of stealth is that O2 networks struggled when they took on the iPhone. Traffic increased 18-fold in as many months. To make they don’t run into similar problems with “iPhone Killer” the Palm Pre, O2 has installed an extra 200 base stations in London and is talking to Nokia Siemens to optimise their infrastructure
The mobile telephone industry is joining the HD wave as Orange announces today that it will make high definition calls available in 2010.
The HD voice service, which will require customers to buy new handsets, promises to make callers feel as if they are in the same room. France Télécom-owned Orange is the first mobile phone company to announce a British HD voice service and it hopes the clearer calls will usher in a new standard throughout the industry.
“HD Voice really does inject a level of innovation into mobile phone calls, making it sound as if callers are actually in the same room. Once people have tried it, they won’t want to go back,” said Tom Alexander, Orange UK chief executive .
Orange plans HD voice trials in the new year and a nationwide introduction later in 2010. It is working with handset manufacturers to develop devices that can support the new service.
HD voice provides better audio quality thanks to a wider speech bandwidth. Explaining the service, Orange says: “High definition voice doubles the spectrum devoted to the spoken voice, making it possible to transmit all the nuances of the human voice.” It also fades background noise to provide clearer conversations and even if only one of the two phones in a conversation is HD-enabled, the sound quality will still be significantly better than it is now, the company claims.
The Orange announcement comes just days after rival network O2 apologised to customers who could not make phone calls because its London network was overwhelmed by smartphones such as Apple’s iPhone.
Analyst Ben Wood, at telecoms consultants CCS Insight, said Orange would be looking to use its HD voice service to tap into reports of customer frustration with O2. “This underlines our belief that quality and performance will be key battlegrounds among the UK network operators in 2010,” he said.
“The iPhone has emerged as the catalyst to a renewed focus on network quality, performance and coverage; HD voice is another tool in that battle. Orange is bound to use this to compete with O2” Orange launched the world’s first high definition voice service for mobile phones in Moldova in September. It chose the country because its network is state of the art, having only started in 2008.
The British launch follows two years of “considerable investment” in its mobile network, says Orange. It has sought to differentiate itself in Britain’s fiercely competitive mobile phone market by flagging up its wide high speed 3G coverage. When Orange started selling the iPhone last month, ending O2’s two-year long exclusive grip on the handset, rather than try to secure new customers on price it attempted to lure customers on to its network on the promise that it has better coverage than any of its rivals.
Prices for its HD calls have yet to be set and it is not yet known whether they will cost more than standard calls or if Orange will use the higher quality promise to differentiate itself from rivals. In Moldova the cost of calls did not change when the HD service launched
Apple’s data-hungry iPhone at times overwhelmed operator O2’s network in London during the last six months but additional capacity helped ease the problem by December, O2 said on Tuesday.
O2, which is owned by Spain’s Telefonica, said some customers in the UK capital had periodically not been able to make or receive calls or transmit data because of pressure on the network from smartphones such as the iPhone. O2, whose exclusive contract to market the Apple handset in the UK expired in November, had seen an 18-fold increase in data traffic since the start of the year, a spokesman said.
Chief Executive Ronan Dunne told the Financial Times on Tuesday: “Where we haven’t met our own high standards then there’s no question, we apologise to customers for that fact.” “But it would be wrong to say O2 has failed its customers en masse.”
O2’s network has suffered a spate of crashes since the summer, when it said it was seeing a huge surge in data traffic. The company had invested 30 million pounds ($48 million) in its London network to meet demand, the spokesman said, and 200 extra mobile base stations had been installed.
O2 is not alone in finding its network stretched by iPhone users, who have some of the largest appetites for downloading applications, surfing the Internet and using email. AT&T temporarily stopped selling the iPhone on its website to New York City residents over the weekend, causing speculation that the operator may have been trying to ease congestion on its network.
O2 said it did not encounter any problems over the Christmas period. Orange, owned by France Telecom, started selling the phone in the UK in November, while retailer Tesco launched an iPhone service earlier this month. Vodafone, the world’s largest mobile operator by revenue, will join the iPhone battle in Britain and Ireland on Jan 14